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Indonesia Shipping Report Q1 2012
Business Monitor International, Dec 2011, Pages: 132
Business Monitor International's Indonesia Shipping Report provides industry professionals and strategists, corporate analysts, shipping associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Indonesia's shipping industry.
BMI View: Bucking The Trend:
At the moment, Indonesia is one of the few economies showing capacity to buck the trend towards a global economic slowdown. The economy remained dynamic in 2011, and in 2012 BMI expects it to continue to push ahead. This is good news for the ports and shipping industry. While net exports may falter a little as global demand cools, domestic consumption and investment look resilient. BMI now forecasts 2012 GDP growth of 5.8% (following the 6.3% expansion in 2011). BMI's outlook for 2013 is for growth to accelerate again to 6.2%. In the five years to 2016 BMI expects growth to average 6.2% per annum, confirming the country as a regional outperformer.
Industry specific factors also remain broadly positive. Investment interest in modernising the country's port infrastructure is gathering strength. If the government can clear out red tape and reduce political risk, a series of major projects may go ahead over the next couple of years. It is also possible that both domestic and international shipping rates may now be on a modest recovery path.
Headline Industry Data:
- Tanjung Priok total tonnage growth forecast for 2012 is +5.1% to 44.337mn tonnes, with average growth of 5.2% expected over BMI's forecast period to 2016.
- 2012 Palembang total tonnage growth forecast is +5.5% to 10.796mn tonnes, with average growth of 5.3% over BMI's forecast period.
- 2012 Tanjung Priok container growth forecast is +9.4% to 5.173mn TEUs, with average growth of 8.9% over BMI's forecast period.
- Palembang container growth forecast for 2012 is +5.9% to 84,680TEUs, with average growth of 6.2% over BMI's forecast period.
Key Industry Trends:
Chinese Help For Port Infrastructure Problems?
Chinese investment may be the answer to Indonesia's particular situation: encouraging export and manufacturing growth prospects, poor infrastructure, high logistics costs, and inadequate port capacity - a classic bottleneck. China Investment Corporation (CIC), an investment arm of China's sovereign wealth fund, may invest up to US$25bn in Indonesia's mining and infrastructure industries. BMI believes this investment by China highlights a trend set other countries, whereby China secures access to national resources through investing in a country's infrastructure.
APM Terminals Looking For An Opening?
In September 2011 APM Terminals (APMT) looked likely to expand into Indonesia after the company's parent, AP Moller-Maersk, signed an investment deal with Indonesian port operator Pelindo II. Given that AP Moller Maersk counts the world's largest container line, Maersk Line, and a major port operator, APMT, among its subsidiaries, BMI believes it will seek to establish terminal operations in the country.
Port Of Jakarta Expansion Project To Start
Five major groups have been lined up for a US$1.37bn expansion project at the Port of Jakarta, also known as Tanjung Priok. The project, which will boost the handling capacity of the port by 1.8mn TEUs, was scheduled to begin construction before the end of 2011 and be completed by 2015. Among the various consortia competing for the job are large international groups such as Hutchison, Mistui, Evergreen, and Port of Singapore Authority.
Key Risks To Outlook:
BMI highlights two main risks to its Indonesian ports and shipping forecasts. Firstly, the country is exposed to another slowdown in global growth, or even the full 'double-dip recession' that many commentators have been fearing. However, it has to be stressed that this is a smaller risk than in many other countries: based on a strong domestic economy, Indonesia was able to remain on a growth path throughout the 2009 recession. If anything, in 2012 BMI sees the economy as more resilient, as it believes Indonesia's long-held status as a high-risk country among investors is gradually changing for the better.
A second downside risk to BMI's outlook is the possibility that the country's ports will not be able to handle the increasing levels of traffic if sufficient investments are not made. Indonesia's main ports suffer from congestion and low efficiency levels, raising the fear that lines could avoid some of the country's key terminals, calling at more competitive neighbouring facilities.
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